Capital city housing values have increased by an average of 8.7% since May, 2012 – but RP Data research analyist, Cameron Kusher, says it’s still too early to celebrate a full-scale recovery.
“Although there is some clear strengthening of values, the magnitude of the increase is less than what was recorded during previous growth cycles, despite positive data released in the September RP Data-Rismark Home Value Index results earlier this week.”
While results showed capital city home values had increased by 5.5% over the past 12 months – and 8.7% since their low point in May, 2012 – other recent growth periods in the housing market show the rise in values during the current cycle is significantly more modest by comparison.
As mentioned above, home values across the combined capital cities have been rising since May last year. However, over the 17 months from April, 2002 to December, 2003, combined capital city home values increased by 27.6%, according to Kusher.
Furthermore, value growth over the first 17 months from December, 2001 was three times greater than value growth over the most recent growth phase. In 2007, growth was almost double that of the current period and over the same period following December, 2008, values had grown at more than double the current rate of value growth.
Kusher also adds that data taken from each of the individual capital cities reveals some interesting results.
For instance, over the three previous growth phases, Melbourne’s housing market recorded the strongest level of capital growth, followed by Sydney in 2001 and 2009 and by Brisbane in 2007.
In the current recovery phase, he says, the market has taken its lead from Sydney, followed by Perth and Darwin – though capital gains in the last two markets is now decelerating.
Kusher says the periods of strong capital growth in Sydney and Melbourne have also tended to not be as long as those in the other major capital cities.
“This was particularly noticeable in the 2001 growth phase where value growth had slowed in Sydney and Melbourne but continued for a much longer period in Brisbane, Adelaide and Perth.
“Given that historically growth periods have tended to be shorter in Sydney and Melbourne than those in Brisbane, Adelaide and Perth, it would be reasonable to anticipate that the current rate of value growth will not continue for an extended period of time. It is also reasonable to expect that over the coming month’s value growth in Brisbane and Adelaide, where the recovery to-date has been quite dormant, we may start to see stronger value growth conditions as the affordability of these cities improves relative to the other major capital cities.”